According to the Commodity Market Analysis System of SunSirs, the domestic asphalt market fluctuated and declined in May. From May 1st to 31st, the average producer price of asphalt in Shandong Province dropped from 3,680 RMB/ton to 3,572 RMB/ton, a decrease of 2.95%, and the price decreased by 5.35% year-on-year.
In early May, some regions saw narrow price reductions within their price ranges, with overall spot asphalt prices mainly stabilizing slightly. Affected by the significant decline in crude oil during the holiday, some brand markets in Shandong and North China remained stable and fell after the holiday, while the asphalt market showed some fatigue and the trading atmosphere was light.
In mid May, the domestic asphalt market fluctuated and fell, and international crude oil prices weakened and consolidated. The asphalt fundamentals were affected by bearish factors, and early maintenance and production conversion equipment gradually resumed, leading to an increase in market supply. However, downstream procurement is mainly based on demand, and actual delivery is average.
In late May, the weak operation of international crude oil led to significant competition for refinery resources, putting pressure on the asphalt market. Some high priced resources still have expectations of making up for losses. In the short term, the downstream procurement intensity of terminal demand is generally limited, and the domestic asphalt market will maintain a weak adjustment in the short term.
Approaching the end of May, the current situation of asphalt spot prices maintaining high pressure and low prices stabilizing is mainly due to the outflow of some low-priced resources at the end of the month, and the mainstream market transactions are stable, moderate, and downward. Regional resource competition is more obvious, but terminal demand is constrained by slow improvement in funding issues, and the market mainly purchases on demand.
On the cost side, international crude oil prices showed a downward trend in May, and there was positive progress in the ceasefire negotiations between Palestine and Israel in the early days. The US Energy Information Agency also lowered its global demand forecast, but Saudi Arabia's view on the demand outlook has improved. In mid month, the market was concerned about the pressure of high interest rates on the economy and demand, but some economic data improved, and the instability of the geopolitical situation remained, with international oil prices falling first and then rising. In the latter half of the year, the geopolitical situation continued to ease, and market concerns about the economic and demand prospects were difficult to resolve. Coupled with the increase in US commercial crude oil inventories, the overall international oil price continued to decline.
On the supply side, in terms of major production enterprises, Qilu Petrochemical switched to producing residual oil from May 19th to 21st, while Shandong Shengxing maintained its conversion status. However, Dongming Petrochemical resumed asphalt production on May 17th, and the production in Shandong region slightly decreased. The increase in daily production of Jinling Petrochemical has significantly increased production, and the resumption of asphalt production in Xinhai, Jiangsu at the end of the month has led to a slight increase in the operating rate in the Jiangsu region. Cangzhou XingaoRMB Plant has stopped producing asphalt, resulting in a slight decrease in supply in Hebei region. The comprehensive operating rate of the asphalt industry has decreased compared to the previous month. In April 2024, the import volume of asphalt was 365,000 tons, which was +23.6% compared to the previous month and +10.8% year-on-year. The import volume has increased, and there is a negative impact on the supply side.
On the demand side, the weather in the northern region is still favorable or provides support for basic needs, and demand is expected to slowly recover. However, there are still many rainy days in the southern region, and overall demand is difficult to improve. The demand side of the asphalt market has a mixed impact.
As of the close of May 31, the petroleum asphalt futures market has fallen. The main asphalt contract 2409 opened at 3,672 RMB/ton, with a highest price of 3,696 RMB/ton and a lowest price of 3,650 RMB/ton. It closed at 3,658 RMB/ton in the last trading day, a decrease of 19% compared to the previous settlement day, a decrease of 0.52%. The trading volume was 223,967 lots, and the position was 226,047 lots, with a daily increase of 4,203.
According to future predictions, the supply of asphalt is expected to decrease. Qilu Petrochemical and Shengxing Petrochemical in Shandong region have plans to switch to producing residual oil, while Dongming Petrochemical plans to undergo maintenance; There is a slight difference in demand between the north and south. The asphalt analyst of SunSirs predicts that the short-term asphalt market will be mainly weak and consolidating.
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